UK lawmakers vote to cap welfare spending despite political divides

March 26, 2014|William James | Reuters

(POOL New Reuters, )

LONDON (Reuters) - Lawmakers from Britain's three major parties on Wednesday voted to limit how much the government can spend on welfare, despite deep disagreement over the future of a social security system that accounts for almost a third of all government spending.

The 210 billion pound per year welfare spend has been the subject of fierce debate among political parties as the government tries to close its budget deficit and cut a 1.2 trillion pound ($1.98 trillion) national debt.

On Wednesday, members of parliament voted 520-22 to impose a cap on measures such as disability allowance, child support and housing benefits that account for more than half the welfare budget. Pension payments and cyclical unemployment benefits were not included.

The cap, due to come in after a 2015 election, was set at 119.5 billion in 2015/16 - in line with current spending plans. Under the new rules, any party that breaches the limit will have to give a public explanation and seek parliamentary approval.

Conservative finance minister George Osborne, who has sought to pare back access to the welfare state, said the cap was necessary to fix a system design by the previous Labour government that was "not fair and not affordable".

"Those who want to undo our welfare reforms will now have to tell us about the other cuts they will make, or come clean and admit to the public that what they really want are higher welfare bills."

The vote had been seen as an attempt to bait Labour into disagreeing with the government and exposing themselves to accusations of a lack of fiscal discipline.

But, opposition finance spokesman Ed Balls said his party had long called for a cap on welfare spending.

Balls said they would abide by the cap but change the way money is allocated within it. Labour has heavily criticized the government, saying it has failed to get a grip on rising borrowing and to prevent a fall in Britons' living standards.

"We will make different and fairer choices to keep the social security bill down and tackle the root causes of higher welfare spending," Balls said.

Earlier this year Osborne, whose Conservative party polls show is perceived by voters to be more trusted on the economy, said he would make 12 billion pounds of further cuts to the welfare budget if his party wins the next election.

The Liberal Democrats, junior partners in the coalition government, said the cap was a helpful medium- to long-term planning tool for future governments.

But they strongly disagreed with the Conservatives' plan for welfare to produce the bulk of the savings needed to meet the coalition's agreed fiscal plan, which aims to eliminate the budget deficit, currently at 6.6 percent, by 2018/19.

"Welfare spending isn't going to be immune from savings at the next election," a senior Liberal Democrat source said. "We're going to have to find savings but we will go for a different mix of tax rises and spending cuts than the Conservatives."